Question

Think about the concepts of risk and return in the context of the size of a firm. Would these change if the firm were large? Small? Medium-sized? Why or why not? (Provide 300 original analysis, perfect grammer)

Answer 1

Think about the concepts of risk and return in the context of the size of a firm. Would these change if the firm were large? Small? Medium-sized? Why or why not?

Answer= Yes, the size of firms effect the risk and return of the firms Because

• Market capitalization and firm size and the relationship with risk and return are based on financial theory.
• According to the financial theory ,market capitalization is present value of future cash flow.
• Cash flow and firm size is foundation for market capitalization.
• firm size have positive effect on profit and return because if firm size will increase chance of profitability will also increase.
• firm total assets have negative effect on profitability because if firms assets will increase firms liabilities also will increase.
• return is related to the firm size so larger the firms larger it profit and return and smaller the firm smaller its profit as compare to large size firms.
• there is correlation between increase in firm size in term of revenue and increase in profit but if increase the firm size in term of employee then weak correlation and decrease in profits.